SIOUX FALLS, S.D. (KELO) — There’s no silver bullet solution to the child care crisis in South Dakota, but some state lawmakers believe a starting point to changing the broken system starts with improving the existing child care assistance programs through the Department of Social Services.

During the last legislative session, no action was taken by lawmakers on the topic of child care despite legislative leaders acknowledging it as a challenge for families in the state. 

Republican Sen. Tim Reed told KELOLAND News he’s been holding informal meetings with economic development groups and childcare advocates to gather more information and possible legislative solutions to the issue. 

“We didn’t quite have enough information to really jump into it as an interim study,” Reed said. “You kind of need to know where you’re heading. This isn’t an issue that we’re going to solve in one legislative session.” 

Reed said the solution can’t be just legislation either, he said the business community needs to help in finding solutions to strengthen the state’s workforce. He said a larger task force on the topic may be needed to help enable long-term solutions. 

“We do have some ideas for some legislation,” Reed said. “We found that one of the issues is we just aren’t paying enough in the subsidy rates. Today, subsidy rates are calculated by using the market rate.”

Reed said the subsidy rates need to be calculated by true cost because market rate isn’t enough for childcare businesses to survive. 

“If we don’t start increasing the amount that’s being paid, we’re never going to be able to get to the point where we can have a good workforce for child care,” Reed said. 

To qualify for the federal subsidized childcare payments, a family needs to be at 209% of the federal poverty level which is $48,133 for a family of three or $57,998 for a family of four. DSS said on average there’s 1,695 low-income families per month receiving childcare subsidies at 783 different childcare providers. Statewide, there are more than 58,000 kids ages 0-4, according to Casey’s KIDS Count. 

Reed said only 7% of the families eligible for subsidized childcare assistance in South Dakota are using the payments.  

Democratic Rep. Erin Healy told KELOLAND News the state is currently under-utilizing federal assistance for child care. She added the state has turned down federal money in the past to put towards regulated and licensed childcare providers.  

“I do think looking into true cost vs. market rate is a wonderful start in order to get our providers up to speed where they need to be in order to operationally exist,” Healy said. 

“We have a lot of counties that don’t have any registered childcare providers. It’s voluntary for family child care providers to actually register and that will allow them to be eligible for grants and other assistance.” 

Healy added unregulated child care providers would be required to have background checks and annual inspections to become registered through the state. 

“There are good providers out there who aren’t registered,” Healy said. “But it is really difficult for parents, myself included, to send a child to an unregistered daycare provider.”  

Regulated vs. unregulated child care providers 

Data from Early Learner South Dakota showed there’s around 800 regulated child care providers in the state and more than 2,000 unregulated child care providers in the state. 

DSS received more than $100 million in child care aid from the American Rescue Plan Act, but the money was required to go to state-registered and licensed child care providers.   

Reed and Healy both said they hope increasing the state’s match to existing federal child care assistance to true cost instead of market value will encourage more child care providers to become registered and licensed with the state. 

“Anytime that you’re talking about child care, you have to talk about quality child care,” Reed said. “I always use the word quality all the way through the system, we have to make sure that it’s quality child care so they’re ready for kindergarten.” 

Data from the Sioux Falls Child Care Collaborative said a family with one child would need to make $163,429 to “afford” child care at current tuition rates in Sioux Falls. The U.S. The Department of Health and Human Services said child care tuition should cost no more than 7% of the household income to be considered “affordable.” 

KELOLAND’s Bridget Bennett reported on newly expecting parents finding year-long waitlists for child care in Sioux Falls. One Sioux Falls mother had twins and at one point had to use three different child care providers for her three kids.

Sioux Falls City Councilor Rich Merkouris said the council should consider adding child care to a resolution of legislative priorities in 2024. 

“There’s opinions all over the map on the legislative solution and legislative impact,” Merkouris said during Monday’s informational meeting.

“The state does have a child care assistance program. That program is a little bit archaic and has got some sizable, bureaucratic challenges and other challenges with it,” Merkouris said. “It would be an area that we could maybe potentially pinpoint on and say some enhancement of this and refinement of this is an area that would impact the economic businesses and individuals in our community.”  

Child care challenges acknowledge by lawmakers 

During the last legislative session, there was only one drafted bill involving the topic of child care and it was tabled during a meeting of the House Health and Human Services committee. 

Despite the lack of legislative action on the issue, Healy and Reed both said they believe a majority of lawmakers acknowledge child care as an issue in the state. 

“I believe that a large majority of the members understand that it’s a problem because business leaders are always talking to us about it,” Reed said. “It’s a workforce issue.” 

Healy said there’s a growing concern with people and lawmakers about child care. 

“I just worry that there isn’t the appetite to really solve the problem here in the next few years,” Healy said. “There are so many cooks in the kitchen who understand this issue who bring up very valid points. This is going to take a long time in order to come up with the right solutions.” 

Both lawmakers also agreed a lack of complete data and lobbying forces for the child care industry are missing in Pierre. Reed said he believes a coalition is needed and child care providers need support from business organizations. 

“We have all these other states that are putting $100 million, even more funds per year into child care,” Reed. “I’m afraid they’re going to beat us on work force. Other states are going to be ahead of us and that’s where businesses are going to want to go locate.” 

Healy said she supports creating a state entity that would focus on child care and early education. She said the burden is on businesses and economic development groups to explain the importance of child care. 

“We are finding it more common for someone in the household to have to stay home, in order to have legitimate child care,” Healy said. “We really need a lot of different actors to step up to form a coalition in order to focus on child care.”